DreamWorks Advances Most in Year on ‘Madagascar 3’ Sales

Nov. 2 (Bloomberg) -- DreamWorks Animation SKG Inc., the
studio that produces the “Madagascar” film series, rose the
most in a year in New York after third-quarter sales and profit
beat analysts’ estimates.

The shares advanced 6.7 percent to $21.99 at the close to
mark the biggest gain since Nov. 7, 2011. The stock has risen 33
percent this year.

The studio released “Madagascar 3: Europe’s Most Wanted,”
in June. The third film in the series about wayward zoo animals
has collected $717 million in worldwide revenue, according to
Box Office Mojo, a film researcher. Sales outside the U.S.
totaled $503 million, DreamWorks Animation said.

“The company posted a solid quarter after several
disappointments,” said Paul Sweeney, North American research
director for Bloomberg Industries. “At the end of the day for
this company, it is about generating a steady stream of hits.”

Third-quarter net income rose 24 percent to $24.4 million,
or 29 cents a share, from $19.7 million, or 23 cents, a year
earlier, the Glendale, California-based company said yesterday
in a statement. Analysts projected 11 cents, the average of 10
estimates compiled by Bloomberg. Sales rose 16 percent to $186.3
million, exceeding projections of $136.1 million.

DreamWorks Animation’s second movie of 2012, “Rise of the
Guardians,” opens in theaters on Nov. 21. The film features
voices of Hugh Jackman and Alec Baldwin.

Expansion Effort

Chief Executive Officer Jeffrey Katzenberg is seeking to
broaden the company’s revenue beyond two to three film releases
a year and library sales. He’s opening an animation studio and
live entertainment venture in China and a theme park in New
Jersey. He’s also expanding the studio’s cast of characters with
the August purchase of Classic Media, owner of Casper the ghost
and Rocky the flying squirrel.

In August, Katzenberg struck a new film distribution accord
with News Corp.’s Twentieth Century Fox, replacing one with
Viacom Inc.’s Paramount Pictures. The accord lowered the
company’s costs for video-on-demand and allowed it to keep
revenue from domestic television, such as sales to Netflix Inc.

Sound System

DreamWorks Animation also said yesterday it agreed to make
its next 15 animated movies using Barco NV’s 3-D sound format.

The agreement will begin with “Rise of the Guardians,”
the companies said in a statement.

Studios and technology companies are developing new sound
systems to draw a clearer distinction between theaters and home
viewing. The Barco system distributes the soundtrack to speakers
set at three heights in the theater to provide a more natural
sound, the companies said.

Dolby Laboratories Inc.’s competing system called Atmos has
been featured in some films including “Brave,” from Walt
Disney Co.’s Pixar.